I noticed recently at Costco that they’re selling the Canon Rebel XTi with 18-55mm and the Nikon D80 with two lenses kit.

That’s silly. The D80 + 2 lenses (28-70 and 70-300) cannot compete against the Rebel XTi (+ 18-55) in a store like that. For one thing, they’re the same 10 megapixels. The D80 kit works out to be much more expensive (around $1200 vs $900). Sure there are differences, but the lenses aren’t even connected to the cameras so who is going to notice the larger and brighter viewfinder or better construction? And really, is this market going to care about those things? All your typical Costco buyer is going to see is that the D80 looks to be the same camera for a lot more, breaking the $1000 barrier is a big deal nowadays

It should come as no surprise that last time I passed by, the XTi was sold out.

What to sell and why it won’t happen

Instead Nikon should sell its D40 kit: a Nikon D40 with its 18-55mm. Sure it’s “only” 6 megapixel, but realistically, the price gap is so large that people will have a hard time justifying the way more than 50% price jump to Canon for 4 more megapixels when Dave Pogue just told them that 6 is good enough. (The Canon XTi also has more AF point, dust shake, etc. but like the Xti v. D80 comparison, nobody is going to understand what that means from a tiny little Costco placard.)

And under usage—size, feel, and buffer—the D40 just shines and shines. The customer’s who buy that camera would fit right into that “great value” Costco mold, coupled with a product that is set to have almost no returns.

If Nikon could allow Costco to sell this for $520 instead of $600 then you could stack the boxes like before and it will fly off the shelf. Especially since the D40 box is so much smaller than the D50/D80 kit. (Yes, these things will matter. If I had my say I’d think Nikon should take a page out of Apple’s playbook and make the D40 kit as small as practical: make the charger smaller; include a thinner USB cable or a ZipLinq; move the manuals to CD that contains picture project (one CD only); only bundle the English/Spanish quickstarts and warantee information; reduce the bulk on the camera packaging; get rid of every baggie; lose the eyepiece cap, accessory shoe cap, the lens hood and lens bag, keeping only the camera strap for branding purposes…)

The sweet spot is getting a digital SLR in a small box with a kit that is selling at around $420. That’s impulse buy territory for a Costco buyer passing by the digital SLRs—someone is going to say to themselves, “That’s how much I paid for my compact digital camera two years ago. I should upgrade.” Pentax, are you listening? Sell your old *st DL or new K-110D there and make the box smaller!

Of course, Nikon won’t allow any supplier to undercut the list on a new camera without rebates. And Costco’s policy of not selling a product for more than a certain percentage above their costs keep them from selling the D40. Stupid.

An alternative is to make that D40 + two lens kit for $600. But you can’t do that because the 70-300mm is not AF-S so the AF won’t work on the D40 and Nikon doesn’t sell a body-only model to vendors. (I could picture the 18-55mm DX + the 55-200mm DX, but the latter is $170 and selling briskly so you’d really offer this around $700 at best which is not as attractive, even though this’d be a much better value. And also, the box would be bulky.)

That crappy Catch 22 between two companies who won’t budge means a whole lot less money to go around for both Nikon and Costco.

This is why I skipped by the camera section at Costco. Too depressing to see Canon doing well in a market that Nikon should have a lock. As Dark Helmet put it, “Evil will always triumph over Good because Good is stupid.”

8 thoughts on “Costco camera thought of the day”

Basically what I think the consumer wants in a dSLR is a small box that they can put in their cart, purchase, pull out and start shooting.

In fact, I think Nikon and Canon should charge the batteries, sell it inside the camera itself, and chuck the battery cover with thier budget cameras. (Pentax can be forgiven because they use AA’s still.)

The nicest packaging I’ve seen in pocket cameras is the Casio line, and it doesn’t hold a candle to a typical Apple Mac or iPod. 😉

To your last point. I am not suggesting this digital-only manual for professional or semipro cameras. I’m thinking that for the target market of the D40, just as you chucked the CF for SD and got rid of the screw motor, you should chuck the paper manual. For those that need a reference in the field, there will be a healthy aftermarket of laminated instruction cards and Thom and others will sell more “missing manuals” a la Mac and iPod.

Of course, it would help if Nikon had more sport photographers using their kit. Looking at the sidelines of any sporting event, you see nothing but off-white lenses. This is Canon’s biggest marketing piece, and they pull it off with little effort.

Smaller boxes are better. I remember opening my first iPod and being impress by how much stuff was packed in there. I also recall the fact that Wal-Mart required games manufacturers to put their product in the mini-box and how that has benefited everyone (including the environment — every little bit counts)

An easier to handle box does give an impression that the contents therein are also small. The box for the Canon a70 was almost as big as a body-only XT box. Camera manufacturers don’t appear to care about this, it seems.

And I’ll never accept a manual on CD. I can’t load it up in the field and read it to remind me what some cryptic function number on my 580EX means.

I’m inclined to agree with this quote (re: the D80 versus Rebel XTi) from dpreview.com: “In my opinion, its customization, performance, build quality, comfort and design are worth the price difference between it and the competition. Having said that Nikon may struggle ‘in stores’ to fight Canon’s (aggressively priced) EOS 400D ($200 is quite a big difference). If you’re a more discerning photographer who can see the advantages offered by the ‘all round’ D80 you may well consider the extra money well spent.”

Sums it up for me. Nikon has always been a better overall product while Canon has always had better mass marketing appeal (more aggressive built-in sharpening to make pictures appear to be more crisp than Nikon’s, naming, the whole “white lens” thing… though Canon really has always had better auto-focus and speed than Nikon and does make a better pro sports shooter’s choice). It would be very difficult for Nikon to out-market Canon at the Costco level… it is Canon’s strength.

FYI, I’ve always used Nikon for my work (from the old F3 to the F4, F5 and currently the D1x and D2x… I’m a photojournalist… http://www.aphotoaday.org/china1.html ) and Canon for my snapshots (Powershot series ’cause I can slip it in my pocket).

@Stuart: Great points. I think though that the Nikon D40 is there at a price point and value that will be hard for Canon to match. That’s the camera I’d like to see more of, even though I’d never buy it (no 50mm prime with autofocusing on that body).

Have you noticed the D200 is starting to approach 30D territory in price? Canon had better come out with the 40D soon.

Oh yeah, I think the D40 should be sold with the kit lens attached to the body. It’d make it a little bulkier but with the right presentation…

Imagine you open the box and there is the D40 + lens + cap just sitting there in a cardboard cutout painted nikon yellow like it’s a display case—no plastic baggie, no styrofoam stuff, no body cap, no lens hood. Next to it is a small wall wart charger (it can be in two integrated pieces to support international plugs, a la Apple).

Underneath the presentation box is a small cardboard packet (also in Nikon yellow) which opens to reveal a software disc, a warantee card, and a tiny quickstart manual in two languages. The only other thing there is a Nikon camera strap and a retractable USB mini-USB cable.

The camera should probably have a small SD card and a charged battery.

Heck at that point make the top box out of hard clear plastic a la my Norelco shaver. Still stackable, but I bet in the camera stores they just might leave a box sitting out there waiting to be grabbed by the customer for purchase.

Costco has a restriction that they won’t sell a product for over 12% of their costs for a name brand and 8% of their costs for an in-house (Kirkland Signature) one. (The actual numbers are slightly different, but you get the idea). Obviously the margins on the D40 are higher than that.

Nikon has a restriction, like Apple, that until a camera has rebates, they won’t allow anyone to sell the camera below the Minimum Advertised Price for it. The MAP for the D40 is $600 and it’s too new to have rebates. Usually this is done to protect your local camera shop, though I think it’s technically illegal to directly enforce a MAP, so it has to be enforced through creative means: maybe you don’t get a shipment of the next hot product, because it’s not available, but it is for your competitor next door; or, Nikon doesn’t subsidize your advertising campaign; shit like that…

I believe that’s why B&H and Costco resort to bundling stuff with Nikon cameras. In B&H’s case it’s adding in a 2GB Lexar SD card; in Costco’s case it is usually bundling old film lenses instead of selling the kit.

Unfortunately, the D40 is only sold as a kit so that strategy is out. The margins on the DX equivalent lenses don’t give much value to the purchaser, which is the conundrum that is going on here that forces Costco to sell the D80 instead of the D40.

Remember most of these people are never going to buy another lens with their camera again (which is why I don’t care about the dust shake). Their next purchase is an SD card and a bag to hold the camera, and honestly they’d be better served with a bridge camera. The best lens for them is probably the 18-135mm (the 18-200 VR is too expensive for them else they’d drop the $ on a D80 without thinking), but that + D40 is too close to the price of a 400D + 18-55mm and I feel psychologically the person would rather pay for the megapixels and rationalize a purchase of a lens at a future date (even thought it won’t happen).

I’m thinking how can you sell to these people? I honestly think they’d be better served by a D40 than a Canon 400D.

Given all the above, I’d rather that people who make impulse buys on cameras based on packaging don’t get an SLR camera. They’re better off with a P+S. That way they can have that instant gratification thing they get from a live preview.